Schumann threatens to raise insolvency levy
Austria’s social partners are under pressure to reach a swift agreement on the future financing of the country’s Insolvency Remuneration Fund. Labour Minister Korinna Schumann has warned that she will raise the contribution paid by employers through a government decree if negotiations between employee and employer representatives fail.
“The fund must be properly financed. That is my legal responsibility,” Schumann told the Kronen Zeitung. “The social partners are negotiating. If they do not reach an agreement, although I do not expect that, I will issue a decree in time.”
The Insolvency Remuneration Fund, known as the IEF, protects employees when their employer becomes insolvent. It pays outstanding wages, overtime, holiday compensation and severance claims. The fund is financed through a surcharge on employers’ unemployment insurance contributions.
The surcharge has stood at 0.1 percent of the contribution base since 2022. Before that, employers paid 0.35 percent. However, a series of major company insolvencies has rapidly reduced the fund’s reserves.
At the end of 2024, the IEF held around €385 million. Payments for 2026 were initially estimated at €226.7 million. Current forecasts suggest that reserves could fall to only about €30 million by the end of the year. In 2027, the fund may face payments of roughly €350 million, while its income is expected to be far lower.
Schumann said the IEF was not an optional benefit but a vital part of Austria’s social safety net.
“This is about people’s livelihoods and an important pillar of our welfare state,” she said. “Behind the figures are people, families and bills that must be paid.”
The government hopes the social partners will find a solution before the fund’s reserves become critically low. If they fail, Schumann says she is prepared to act alone.
